Brooklyn real estate attorney sentenced to 46 months in prison for mortgage fraud

June 21, 2011 03:53PM

A former Brooklyn-based real estate attorney and owner of a title insurance firm, was sentenced to 46 months in prison last week after being convicted of taking part in a multi-million dollar mortgage fraud scheme, the U.S. Attorney’s office announced today. The attorney, Alexander Kaplan, and 26 co-conspirators (most of whom pleaded guilty) defrauded lenders by simultaneously representing banks, buyers and sellers in transactions.

As a result, from 2004 to 2007, Kaplan was able to submit false information and false documents to lenders without interference, and secured huge loans on properties on behalf of “straw buyers,” or phony purchasers. The value of these mortgages and loans exceeded the value of the properties’ sale price and market values thereby generating profits for the conspirators.

Kaplan’s main involvement was with the purchase of 10 rent-regulated condominium apartments at 243 West 98th Street. Kaplan represented the buyers and the banks, and used false documents to get mortgages that financed the entire purchase price of the apartments. The buyers all claimed that their apartments would be a “primary residence,” yet all the apartments were flipped for almost twice the initial sale price within months. Kaplan represented the buyers and sellers in the flips, too and garnered an additional $13 million in loans by producing false information and documents to lenders.

Kaplan was convicted in February 2009 of 18 counts of mortgage fraud, and faced up to 180 months in prison. He was sentenced to 46 months in prison and three years of supervised release last Friday.

“The sentencing guidelines for the case were extraordinarily high,” said James Froccaro, who represented Kaplan in the sentencing. “But the judge was very compassionate and fair and sentenced him to 46 months. While the family is upset by the fact that he’s going to prison, they were pleased with the terms of the final sentencing.” — Adam Fusfeld